U.S. Foreign Currency Reporting Requirements: New Sec. 987 Rules, IRS Notice 2026-17, Exemptions, Tax Planning

This CLE/CPE webinar will provide attorneys and tax professionals guidance on IRC Section 987: The 2004 final regulations, and more recent IRS guidance for taxpayers. The panel will discuss the application of Section 987 to foreign branches and controlled foreign corporations (CFCs), options, and tax planning considerations.

The IRS final regulations for foreign currency reporting include provisions that significantly impact companies with foreign operations. Section 987 introduces updated foreign currency reporting requirements effective for the 2025 tax year onward. Tax counsel must have a complete understanding of these rules and recent IRS guidance to assist taxpayers in avoiding penalties and maintaining compliance.

Section 987 covers how taxpayers with qualified business units (QBUs) operating overseas calculate taxable income and foreign currency gains or losses. Taxpayers have struggled with the application of Sec. 987 and methods of calculating income stemming from overseas operations, prompting the release of IRS Notice 2026-17, which provides guidance to ease the complexity of these rules.

IRS Notice 2026-17 includes an option to elect to use an earnings and basis pool method for calculating Section 987 gains and losses and an exemption election for CFCs. Tax counsel and businesses with foreign operations must evaluate elections and exemptions under the new rules, and understand the impact of Sec. 987 on international tax planning.

Listen as our panel discusses Section 987 reporting requirements, recent developments, the pros and cons of new elections and exemptions, and offers tax planning guidance for taxpayers with foreign business operations.